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Instacart is getting a big boost from its grocery delivery business – a signal that even in the inflation economy – shoppers are still spending and increasing the number of orders they place on the platform.
The delivery giant reported strong second quarter earnings on Tuesday after the bell, prompting its shares to soar after it forecasted strong profits and sales for the upcoming quarter.
“As the leading online grocery marketplace, our scale and critical advantages continue to help us serve our customers, retailers, brands, and shoppers better,” said Fidji Simo, Instacart’s chief executive, in a letter to shareholders. “At the same time, we’re investing in an ambitious portfolio of longer-term bets that are starting to show promise and have the ability to unlock new growth opportunities.”
The Maplebear company, more commonly known as Instacart, said it is also focusing on boosting its advertising revenue and offering more delivery options to stay ahead of the competition. Moreover, it is also banking on a rise in demand from consumer packaged good (CPG) companies to help it. The company already works with big retailers like Costco and Walmart.
Instacart is forecasting its sales for the third quarter will fall between $8.1 billion and $8.25 billion, about a 8% to 10% increase. The company is betting it’ll get a modest boost from its restaurant partnerships. In May, it said it was teaming up with Uber so that customers could order UberEats food through Instacart’s app, aiming to compete with DoorDash’s dominance in restaurant deliveries.
Instacart blew past Wall Street’s predictions. During the second quarter, it reported a 15% increase in revenue, reporting $823 million. That rise was in part due to the total value of transactions made through Instacart’s app, which increased by 10% to $8.2 billion, according to the company’s letter to shareholders. The Street had predicted it would report $806 million, according to FactSet.
Recently, Instacart said it was expanding its global partnership with Aldi South so that it could use its technology to help the discount grocer create a unified online and in-store shopping experience. Meanwhile, pharmacy giant Walgreens said that it was working with Instacart to accept SNAP/EBT payments for online orders. That means customers enrolled in SNAP ( known as the Supplemental Nutrition Assistance Program) can use their benefits to shop online and get their orders deliveries through Instacart.